The Local Government Association (LGA) was called in to review procurement at the council in the wake of controversy over how consultancy services were acquired in the past.

The LGA said procurement was held in high regard internally, with “many solid achievements” and delivering “good quality services”, but it was “subject to heightened scrutiny in York due to past internal control issues”.

“There remains a negative external perception of council procurement, including among members of the public,” said the report. “This negative perception needs to be addressed if the council is to secure public confidence in its procurement processes and the wider corporate governance arrangements.”

A previous audit report by Veritau in November 2016 focused on the appointment of a communications consultant and their associated company between 2013 and 2016. One particular chief officer, who no longer works for the council, was found to be mainly responsible for employing and making payments to the consultant and the company. These totalled more than £174,000.

The audit could find no material to back up claims contract procedures were followed. “At best this represents a failure to be transparent and to retain all relevant procurement documentation,” said the report. “However, it seems likely that there was a failure to follow proper procurement processes, including obtaining written quotations, ensuring sufficient potential suppliers were approached and agreeing a formal contract.”

The LGA review, carried out in June 2017, said it was “reassured to find that the council has a good corporate procurement function and that the compliance issues are being addressed”.

“However, as the council itself recognises, there is more to do in regard to procurement’s enabling role within the council’s developing commissioning framework and to address the residual negative perceptions of historical procurement issues.”

The report said the council should put in place additional commissioning capacity and implement corporate procurement sign-off of individual procurement strategies and bid documents for purchases worth more than £100,000.

The council’s YORtender e-procurement system should be rolled out as a priority for both quotations and tenders and there should be justification for non-use of it, while engagement with neighbouring councils should be increased.

The review will be presented to the council’s Audit and Governance Committee on Wednesday.

Councillor David Carr, leader of City of York Council with responsibility for finance and performance, said: “The chief executive and I invited this peer challenge for a root and branch review of procurement across the council.

“Recent developments, such as setting up our cost control board, were acknowledged as positive steps toward further improving management and procurement compliance, alongside our focus on organisational productivity and efficiency.

“However, we are not complacent and welcome and will assess all the report’s learning and advice while reiterating our commitment to transparency.”